Sh722million row between Stanbic Bank and aviation firm, Air Afrik escalate after pilot welcome DCI probe

A pilot at the center of a row between Stanbic Bank and an airline has asked a court to dismiss a plea by the bank bosses to stop police investigations into their conduct in a Sh722 million saga.

Captain Eric Lugalia of Air Afrik Aviation Limited said the role of the Director of Criminal Investigations (DCI) derives their mandate from Article 247 of the Constitution of Kenya and through the National Police Service Act 2011 and their role is to carry out criminal investigations.

“That the petitioners/applicants cannot stop the police from doing their work, which is exactly what the Director of Criminal Investigations, the 1st Respondent is doing. That it is only in the interest of justice that if the petitioners/applicants do not have anything to hide, let them answer the issued summons thereof.” He said in a replying affidavit.

This is after the bank and its Chief Executive Officer Joshua Oigara challenged the Directorate of Criminal Investigations(DCI) summons in the Sh722million row with an aviation company.

In the case filed before High Court judge Chacha Mwita, the bank says that the Banking Investigative Fraud Unit (BFIU) summoned the Chief Executive on a day he was with president William Ruto at the Kenyatta International Conference Centre for Inua Biashara MSME Exhibition.

The investigators are also said to have sent Oigara fresh summons requiring him to go to the Kiambu Road headquarters to write a statement regarding an eight-year dispute between the lender and Air Afrik Aviation Ltd.

They say the DCI informed them it was investigating an offence of fraudulent false accounting.

The bank now claims the investigative body is probing a complaint which had already been previously investigated and the bank cleared and is only seeking to interfere with another ongoing case.

The bank’s lawyer Kamau Karori said Air Afrik Limited had filed a complaint with the Central Bank of Kenya (CBK) over the same issue but the regulator threw it out after finding that the bank had done nothing wrong by debiting amounts it had erroneously wired to the firm.

Karori argued that Air Afrik Limited filed a separate case before commercial court judge Nixon Sifuna and which was heard this week.

At the same time, Karori says Oigara was not working with Stanbic at the time of the transaction and that the DCI is being used to cripple the bank’s ability to battle Air Afrik Limited in the commercial case.

“The alleged offence for which the inquiry by the first respondent is being made is premised on false, unjustifiable and erroneous presumptions that were previously investigated…The CBK did not find any wrongdoing on the part of the first petitioner and the second was not an employee of the first petitioner during the period the above events occurred. Those matters are now the subject matter of a civil suit and is therefore no legal or factual foundation and/or basis for summoning the second petitioner.” Karori argued.

A legal officer at the bank Janet Wanjohi said the row stemmed from a transaction in 2016.

Wanjohi explained that Air Afrik Limited was Stanbic’s customer in its South Sudan branch and it operated a business account in Juba.

She said that on February 5, 2016, Stanbic received a credit advice note from the Bank of South Sudan (BoSS) advising that its clearing and settlement account had been credited with $7.2 million (approximately Sh730.8million) for Air Afrik Limited.

The officer said that three days later, Stanbic credited the aviation company’s account with the money after deducting its commission.

Subsequently, Wanjohi said, Air Afrik Limited withdrew at least Sh110million (USD 1,100,000) from the account.

However, she explained that Stanbic realised that BoSS had not actually remitted the money it had instructed it to wire Air Afrik Limited.

The court heard that lender opted to freeze any further withdrawals and it notified the aviation company that the money in the account would be reversed.

“It therefore, in effect, mistakenly and erroneously credited the interested party’s account with its own money. The first petitioner proceeded to apply a “post no debit” instruction on the interested party’s account to prevent any further withdrawals and notified the interested party that the $7.2 million had been credited to its account in error and therefore the un-utilized balance would be reversed.” Wanjohi says in documents filed in court.

Stanbic’s Legal officer, Wanjohi, said that they held several meetings and exchanged correspondences between her employer, Air Afrik and Boss in a bid to resolve the issue.

All through, she argued Stanbic maintained that it had no obligation to pay Air Afrik Limited from its own money as the South Sudan’s government agency had not remitted the money.

Stanbic argued that it had a right to reverse the money already in the account.

Wanjohi said that Air Afrik went ahead to file a complaint with the CBK on June 24,2016 but the regulator threw it out.

The company has filed another civil suit over the matter.